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Poland Corporate Sector Wages declined to 3.8% in April from previous 4.8%

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May 19, 2014

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EUR/USD back from highs

FXStreet (Edinburgh) - After hitting fresh intraday highs beyond 1.3730, the EUR/USD is now deflating to the 1.3720/15 area on Monday.

EUR/USD keeps the bid tone

Despite a choppy session, spot is managing well to keep the trade above the 1.3700 handle, although it lacks conviction to climb further. Nothing of note in the data universe, with Construction Output in the bloc contracting 0.6% inter-month in March and the Spanish trade deficit widening to €2.05 billion in April. “The broader shape of recent price moves suggests to us that an important top/reversal is unfolding in EURUSD around the 1.40 zone as the rising wedge-like shape to the pattern of trade over the past year implies a rally that is losing momentum”, assessed Shaun Osborne, Chief FX Strategy at TD Securities.

EUR/USD relevant levels

At the moment the pair is up 0.16% at 1.3716 with the next resistance at 1.3732 (high May 15) followed by 1.3739 (100-d MA) and then 1.3771 (high May 13). On the flip side, a breakdown of 1.3685 (low May 16) would target 1.3648 (low May 15) and finally 1.3643 (low Feb.27).

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May 19, 2014

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ECB's Liikanen: Asset purchase program could be implemented if deflation risks rise

FXStreet (Łódź) - ECB Governing Council member Erkki Liikanen said on Tuesday that, should the need arise, the central bank could implement various easing measures at the upcoming meeting, such as a broad-based asset-purchases of securities.

Moreover, forward guidance could be strengthened in response to an increase in the deflation risk, Liikanen suggested. In case money markets rise, the possible countermeasures include finalizing SMP sterilization, adjusting the rate corridor, reducing rates or carrying out long-term lending operations.

Conducting lending operations or bypassing banks in funding would be appropriate in case of a considerable reduction in bank lending, the ECB policymaker added.

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May 20, 2014

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Latin America EM Express: Brazilian real drops on geopolitical tensions

FXStreet (Łódź) - Geopolitical tensions stemming from the continuing Russian-Ukrainian conflict as well as the declaration of martial law in Thailand on Monday, weighed on emerging market currencies including the Brazilian real which fell on Tuesday by 0.4% to 2.2164 against the dollar early in Sao Paulo.

Economic data

Argentinian Unemployment rate disappointed on Monday, rising on a quarterly basis to 7.1% in Q1, from 6.4% in Q4 and considerably above forecasts of an increase to 6.7%.

Chilean annual GDP data on the other hand was positive, showing 2.6% growth in Q1, down from 2.7% recorded in Q4 but above expectations of +2.4%.

According to the BBVA Bancomer team of analysts: “Recent data validate both our GDP growth expectation for 2014 (at 3.4%) and our assessment of the necessity of further monetary stimulus during this year (policy rate at 3.25% in eop), although this will remain data dependent, particularly over CPI inflation figures.”

Technicals

At the moment of writing USD/BRL was up 0.02% at 2.2155.

On Monday the USD/BRL daily FXStreet Trend Index was strongly bearish, with the OB/OS Index oversold. RSI was at 41 at the last close, and has climbed to 51 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 98 pips, with ATR (14) shrinking at 191 pips. The 1D 200 SMA was at 2.3024, while the 1D 20 EMA was at 35.1975.

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May 20, 2014

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GBP/USD keeps the bid tone near 1.6850

FXStreet (Edinburgh) - The buying interest remains intact around the sterling on Tuesday, with the GBP/USD meandering around the 1.6845/50 region.

GBP/USD capped by 1.6870

Spot found decent support around the 1.6800 handle, although it could not follow through the area of 1.6870 after UK consumer prices surprised investors to the upside in April. In the meantime, the pair is trading well above the 1.6800 barrier ahead of tomorrow’s BoE minutes. Senior FX Strategist at RBS Paul Robson commented, “Last week we highlighted the shooting star candle and said the risk was for a test into the 1.6775/1.6820 support area (previous resistance), and maybe at a push we might see 1.65/1.66 at some stage”.

GBP/USD levels to watch

As of writing the pair is up 0.18% at 1.6843 with the next resistance at 1.6875 (high May 14) followed by 1.6883 (high May 13) and then 1.6903 (high May 12). On the flip side, a breakdown of 1.6802 (low May 20) would target 1.6784 (low May 16) en route to 1.6732 (low May 15).

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May 20, 2014

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USD/CHF hovering around 0.8920

FXStreet (Córdoba) - The USD/CHF peaked during the European session at 0.8937, reaching the highest price since last Thursday but then lost momentum and pulled. After Wall Street opening bottomed at 0.8913 but then bounced slightly to the upside.

Currently trades at 0.8920, around the same price it closed yesterday. The USD/CHF remains steady moving in a small trading range between daily lows and under 0.8925.

USD/CHF levels

To the upside, short term resistance might lie at 0.8925 (intraday level), 0.8935/45 (daily high) and 0.8960. To the downside support could be located at 0.8910/15 (daily low) followed by 0.8900 and 0.8880.

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May 20, 2014

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Mexico Retail Sales (YoY) rose from previous -1.7% to 1.7% in March

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May 21, 2014

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USD/CHF jumps to nearly 1-week highs at 0.8955

FXStreet (San Francisco) - The USD/CHF is trading higher on Wednesday as the pair is joining its negative correlation with the EUR/USD that is testing key 1.3650 level.

After jumping around 60 pips in the day from 0.8895, the USD/CHF is pricing at its highest level since May 15 at 0.8955. Currently, USD/CHF is trading at 0.8946, up 0.29% on the day, having posted a daily high at 0.8956 and low at 0.8897.

The FXStreet OB/OS Index is reflecting overbought hourly conditions, while the FXStreet Trend Index is slightly bullish.

USD/CHF levels

According to Matt Bacon-Hall, FXBeat Editor, the important levels to follow in the USD/CHF are 0.8950 (I would expect offers 0.8945-50 playing just ahead of the prior high...also check the hourly time frame… there is a corrective structure unfolding which terminates at 0.8950) and 0.8958 (High of A=C....naturally I would expect covering above here).

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May 21, 2014

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United States EIA Crude Oil Stocks change below expectations (-0.1M) in May 16: Actual (-7.226M)

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May 21, 2014

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USD/JPY turns intraday positive

FXStreet (Córdoba) - The USD/JPY is staging a strong comeback, having turned intraday positive, supported by higher US yields.

The USD/JPY has risen more than 70 pips over the last hours, recovering from a 3-month low of 100.82 scored on the back of Kuroda comments as the BoJ Governor sounded pretty optimistic in its post-meeting presser. He said positive cycle in the economy is working and the QE is having the intended effect.

However, the yen lost momentum and surrendered gains across the board. At time of writing, the USD/JPY is trading at the 101.50 area, up 0.2% on the day, having hit a peak of 101.55 in recent dealings.

USD/JPY technical levels

In terms of technical levels, the USD/JPY could find next supports at 100.7 (2014 low Feb 4), 100.62 (50% retracement of 95.80/105.45) and not much till 100.00. On the flip side, resistances are seen at 101.55 (10-day SMA) and 101.66 (May 16 high).

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May 21, 2014

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Latin America EM Express: Brazil's inflation cools to a 6-month low in May

Brazil's Mid Month Inflation growth decelerated to the slowest pace seen since November, according to data published on Wednesday. This is good news for Brazil's central bank which will be able to stop hiking the benchmark rate for now, currently at 11%, in the face of price pressures remaining under control in the last two months.

Brazilian CPI slowed to 0.58% in May, following a 0.78% rise seen previously, Instituto Brasileiro de Geografia e Estatistica said on Wednesday. The deceleration was attributed to an easing of increases in foodstuffs' prices. Year-on-year inflation climbed slightly to 6.31% from 6.19%.

Meanwhile, Mexican Retail Sales surprised to the upside, rising by 0.8% in March, compared with the 1.3% fall in February and against consensus of a 0.2% decline. Year-on-year Retail Sales jumped 1.7%, following a 1.7% drop and against forecasts of a 1.5% decrease.

Technicals

At the moment of writing USD/BRL was down 0.14% at 2.2075.

On Tuesday the USD/BRL daily FXStreet Trend Index was strongly bearish, with the OB/OS Index neutral. RSI was at 45 at the last close, and has slid to 40 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 97 pips, with ATR (14) shrinking at 183 pips. The 1D 200 SMA was at 2.3019, while the 1D 20 EMA was at 2.2249.

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May 21, 2014

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EUR/JPY bounces from 14-week lows

FXStreet (Córdoba) - The EUR/JPY slipped further before Wall Street opening and bottomed at 138.13 reaching the lowest price since February 6. Afterwards rebounded as the Yen pulled back across the board and managed to rise back above 138.50, trimming losses.

Currently the pair trades at 138.66, down 0.15% from today’s opening price. The Euro is headed toward the lowest daily close since early February and has been able to rise only in two days out of the last two weeks.

EUR/JPY technical outlook

The bias continues to point toward the downside particularly after consolidating below 140.00. Some technical indicators show oversold conditions but so far no major signs of a bullish correction has emerged.

To the downside support levels might lie between 138.00 and 138.15 and below here at 137.50 (January 31 low). To the upside, immediate resistance lies at 138.70 (American session high) and then 139.40.

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May 21, 2014

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USD/CAD looking firmer - TD Securities

FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities suggested that the USD/CAD is tracking a slightly firmer profile.

Key Quotes

"USD/CAD is tracking a slightly firmer profile, with the USD maintaining gains above short-term technical resistance in the upper 1.08s seen over the past 24 hours. USD/CAD may not be inclined to move too far today, with key domestic data out later in the week but cross flows may have a pull on the market to some degree. For example, CAD/JPY weakness looks poised to extend back towards the 91 area we think, and may help boost USD/CAD to some degree."

"Generally, we think USD/CAD is in a better technical place after last week's consolidation. The lack of downside follow-through interest below the mid/upper 1.08s suggests to us that, from a technical perspective at least, the bear pressure on the USD is moderating at the moment. Gains above trend resistance off the March peak imply a firmer technical trend may be developing at the very least."

"More broadly, the topside break out from the narrowing consolidation range (bull wedge pattern) that has been developing over the past few months is inherently bullish and signals that the broader USD bull trend is trying to get back on track."

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May 21, 2014

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USD/CHF is disillusioned at 0.8950 resistance

FXStreet (Moscow) - USD/CHF plunged from the resistance level of 0.8950 to its current lows of 0.8928

PMI to digest

The yesterday’s weakness of the euro gave the pair another reason to rise, and proved the still strong correlation between the EUR and CHF moves. Today, the pair may get some more catalysts to move on, as the EMU data is scheduled for release. The market is closely watching any new evidence of fragile recovery in euro zone, thus, any indication of weakness in core or periphery economies may support the demand on USD/CHF with initial target at 0.8950 resistance.

What are today’s key USD/CHF levels?

Today's central pivot point can be found at 0.8932 with support below at 0.890978, 0.8862 and 0.8827, with resistance above at 0.8967, 0.9002, and 0.9037. Hourly Moving Averages are bullish, with the 200SMA at 0.8905 and the daily 20EMA bullish at 0.8867. Hourly RSI is bullish at 56.

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May 22, 2014

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USD/JPY a drop to 100.76 is not ruled out - UOB

FXStreet (Barcelona) - The Market Strategy Team at UOB Group does not discard another bearish attempt to the key area of 100.75.

Key Quotes

"The low of 100.81 low yesterday was just a few pips shy of our 100.75 target. While the mid-term outlook still appears to be bearish, the short-term downward momentum has waned considerably with the strong rally from the low".

"Expect choppy short-term trading in the next 1-2 days but as long as the key resistant at 102.10 is not taken out, we are not ruling out another stab lower towards 100.75".

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May 22, 2014

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USD/JPY a drop to 100.76 is not ruled out - UOB

FXStreet (Barcelona) - The Market Strategy Team at UOB Group does not discard another bearish attempt to the key area of 100.75.

Key Quotes

"The low of 100.81 low yesterday was just a few pips shy of our 100.75 target. While the mid-term outlook still appears to be bearish, the short-term downward momentum has waned considerably with the strong rally from the low".

"Expect choppy short-term trading in the next 1-2 days but as long as the key resistant at 102.10 is not taken out, we are not ruling out another stab lower towards 100.75".

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May 22, 2014

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United Kingdom CBI Industrial Trends Survey - Orders (MoM) registered at 0, below expectations (4) in May

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May 22, 2014

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EUR/USD: Downtrend remains intact - UBS

FXStreet (Córdoba) - The UBS analyst team notes that the downtrend in EUR/USD remains intact, with worries about the European elections next weekend weighing on the currency.

Key Quotes

"The Eurozone current account fell further, confirming our view that the stabilization in Spain, Italy and other peripheral countries brings stronger import demand and reduces the support for the euro".

"The fall of EUR/USD during the Wednesday trading session was however more driven by worries about the European elections next weekend and other soft factors. Nevertheless, it is a nice confirmation that the downtrend in EUR/USD remains intact".

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May 22, 2014

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GBP/JPY hovering around 171.50

FXStreet (Córdoba) - The GBP/JPY is consolidating above 171.00 after soaring on Wednesday and still holds some bullish momentum. During the Asian session the pair reached a fresh weekly high at 171.86, extending the gains extending the rally that started yesterday at 169.75.

On European hours the Pound lost momentum across the board pushing the GBP/JPY to the downside. Price found support at 171.20 and bounced to the upside. Currently is testing levels above 171.50, attempting to approach daily highs

GBP/JPY range-bound

On a wider perspective price continues to move in a range, with a slightly upside bias but facing strong resistance around 173.50; and below here at 172.00. To the downside, price has been rejected from levels under 170.00. The support to the current range lies at 169.40 and then 167.70

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May 22, 2014

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CBoT cut its refi rate - BTMU

FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, observed the CBoT is reversing its last emergency rate hike.

Key Quotes

"The Central Bank of Turkey even judged yesterday that it now has some scope to begin reversing the aggressive emergency monetary tightening which was delivered at the end of January. The CBoT’s actions proved successful at helping to stabilize the lira which has since retraced most of its sharp sell off which was recorded between December 2013 and January 2014."

"The CBoT decided yesterday to lower their benchmark repurchase rate by 0.50 point to 9.50% citing reduced uncertainty and a decline in Turkey’s risk premium as the main justification for the move. The CBoT also stated that it will maintain a tight monetary policy stance until there is a significant improvement in the inflation outlook."

"Inflation is soon expected to peak although it remained elevated at 9.4% in April, and is now expected by the CBoT to be at 7.6% by the end of 2014. With the real policy rate adjusted for inflation only just in positive territory now further CBoT monetary easing would leave the lira more exposed if financial market conditions were to become more volatile again. However, current low volatility conditions still remain supportive for carry currencies like the lira in the near-term."

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May 23, 2014

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Canada Consumer Price Index (YoY) in line with forecasts (2%) in April

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May 23, 2014

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Canada: CPI (Apr) rose 2.0% YoY

FXStreet (Edinburgh) -Canadian consumer prices rose 2.0% on a year to April and 0.3% inter-month, matching expectations. The Bank of Canada Core CPI rose 1.4% over the last twelve months and 0.2% MoM.

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May 23, 2014

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Mexico Gross Domestic Product (QoQ) rose from previous 0.2% to 0.3% in 1Q

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May 23, 2014

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GBP/USD steadies as UK heads into a long weekend

FXStreet (Córdoba) - The GBP/USD entered a consolidation phase during the New York session and has spent the last hours trading within a narrow range.

The GBP/USD dropped roughly half a cent and pulled back toward the 1.6825 area after failing to overcome 1.6875 during the European trade. No UK data was released today and with new home sales as the highlight of the US calendar until Tuesday, the Cable has been left searching for catalysts ahead of the long weekends in UK and US.

At time of writing, the GBP/USD is trading at the 1.6840 area, 0.16% below its opening price, but still on track to close the week higher after receiving strong boost on the back of much better than expected UK retail sales Wednesday.

GBP/USD technical outlook

Valeria Bednarik, chief analyst at FXStreet notes that the technical picture is bearish according to short-term charts. “Below 1.6770 the pair has a pretty clear path down to 1.6730 past week low, but further losses are not yet likely”.

Bednarik locates next support levels at 1.6810, 1.6770 and 1.6730, while she sees resistances at 1.6885, 1.6920 and 1.6960.

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May 23, 2014

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What would a negative deposit rate achieve? - Rabobank

FXStreet (Guatemala) - Analysts at Rabobank explained that given that there are still imbalances in the way liquidity is distributed across the banking system in the eurozone, a negative deposit rate may speed up the process of defragmentation.

“Net policy lending by the Eurosystem to banks in Spain and Italy is still significant, whereas it is negative in some core member states, such as Germany, the Netherlands and Austria, where deposits at the central bank outstrip their borrowings from the ECB”.

“Germany and Luxembourg are also the main counterparts in terms of having net Target-2 claims”.

“We believe it is quite unlikely that core banks will suddenly start lending more to banks in the periphery should the ECB introduce a small negative deposit rate, but we would envision downward pressure on interbank deposit rates and short-term instruments such as T-bills from the highest rated member states, as banks with a large liquidity surplus seek alternatives to paying for their excess reserves”.

“Moreover, global banks, which have access to overnight facilities at other central banks that still pay for excess liquidity, may be incentivized to enter cross currency swaps and put their excess reserves at the Federal Reserve or Bank of England, for example. Therefore, at the margin, we believe a negative deposit rate could also put further downward pressure on the euro exchange rate – which of course does appear to be one of the aims of such a policy measure (although the ECB wouldn’t explicitly admit so)”.

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May 24, 2014

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